TNAG-2755-FCO40-3972-Banking-situation-in-Hong-Kong-1993 — Page 71

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1989 Ed.]

Hang Lung Bank (Compensation of Former Shareholders) Regulations

[CAP. 345

A 9

[Subsidiary]

(2) Revised shareholders funds shall be calculated by preparing a new balance sheet for the company as at commencement after making all necessary adjustments and provisions, including--

(a) making proper and prudent provision against shareholders funds for bad or doubtful

debts of no less sum than the sum determined in accordance with paragraph 4;

(b) crediting or charging (as the case may be) the shareholders funds by

(i) the amount of any revaluation of assets made under paragraph 3(b)(ii)(D);

(ii) the amount of any adjustment of liabilities of the company made under

paragraph 3(b)(ii)(A). (3) "Required shareholders funds" means the amount of shareholders funds that would be necessary in relation to the assets and liabilities shown in the new balance sheet prepared in accordance with subparagraph (2) to enable the company to comply with sections 77, 8Ì, 83, 87, 88 and 90 of the Banking Ordinance (Cap. 155). (27 of 1986 s. 137)

7. (1) The value of the reconstructed company as a going concern shall be ascertained by multiplying the price earnings ratio at commencement, calculated in accordance with subparagraph (2), by the earnings of the reconstructed company at commencement, calculated in accordance with subparagraph (3).

(2) The price earnings ratio shall be calculated by reference to the average of the price earnings ratios at commencement of such banks quoted on a Stock Exchange in Hong Kong which, in the opinion of the Tribunal, are of comparable size and character to the company or, if the Tribunal thinks appropriate, of other banks quoted on a Stock Exchange in Hong Kong, and by making such adjustments to that average as the Tribunal considers reasonable to take into

account-

(a) the fact that the purchaser would gain control of the company;

(b) the prospects for the company after commencement.

(3) The earnings of the reconstructed company at commencement shall be calculated by taking the average of the earnings of the company published for the 3 consecutive financial years ending 31 March 1983 reduced by such amount (if any) as the Tribunal considers necessary to take into account the fact that the performing assets of the reconstructed company may be less than the performing assets of the company as shown in the earnings of the company published for those 3 consecutive financial years.

(4) In this paragraph “performing assets" means an asset on which interest is accrued and properly taken into profit.